Next week I’m meeting a friend of mine called Tom to give him some help and advice with his business.
Tom is a fitness instructor – and he makes his living teaching classes for local gyms and one-on-one sessions. And like a lot of us he wants to increase the amount of money he earns from his efforts.
One of the first problems that he has to overcome is to escape the consulting trap.
What Is The Consulting Trap?
Consulting is essentially trading your time for dollars – irrespective of what market area you are in. If you work for an hourly rate, then you’re consulting as consulting is defined in the Three Prong System (more on this in a moment).
And even though Tom takes group classes – which should fall under the ‘training’ definition of the Three Prong System – it’s still effectively consulting because the different gyms that he works for pay a flat fee for him to take these group classes with their clients.
And when consulting forms the only stream of revenue in your business you’re in trouble. In this business model there are only two ways that you can increase your earnings:
- Charge more per hour
- Work longer hours
Now both of these will work in the short term. But in the long term they are not scalable – there are only so many hours in the day. And when you’re a fitness instructor there are only so many classes you can take a day before you burn out.
And – to borrow a quote from Butch Cassidy and The Sundance Kid – there’s always someone younger and faster (and cheaper).
The other downside to basing your business on consulting is that your income dries up when you stop consulting. If Tom gets sick, or he wants to go on holiday, or he needs a couple of days off to work on some errands….the minute he steps away from his consulting, his income nosedives.
This is the consulting trap that awaits anyone who builds a business on trading their time for money – even if that money if good.
So How Do You Escape The Consulting Trap?
The way to escape the consulting trap is to use a different business model – and the model that I recommend is The Three Prong System.
Now full kudos here – this isn’t something that I’ve developed or thought of. It was taught to me by Sean D’Souza of Psychotactics.com. Sean is a smart guy and a clever marketer and he’s definitely someone who you should be following.
As the name implies there are three elements to the Three Prong System. And consulting is merely the first of those elements. The other two elements are training and leverage.
Training is where instead of teaching one-to-one, you teach to a group. So instead of getting paid by one person for your time, you are getting paid by 10 people. Or 20 people. Or 30 people. Those people might be paying less per unit of them than a consulting client, but the fact that there are 20 or 30 of them makes Training much more lucrative.
And the final prong is Leverage. Leverage is where you create some kind of training materials that people can use to self-study – so that you’re not even there when they are learning. So you create leverage once and sell it many times over. Even when you’re sick. Or on holiday. Or asleep.
By combining all three elements of the Three Prong System into his business, Tom can escape the Consulting Trap.
Here’s one way Tom can use his current situation – of consulting – to transition to the Three Prong System.
Transitioning To The Three Prong System
So currently Tom is consulting only. And let’s use some simple math so you can really grasp the power of this system. We’ll start by saying Tom’s “consulting” rate is $50 per hour.
Tom has a number of one-on-one clients who he teaches on a regular basis. So the first thing he needs to do towards working towards a more efficient way of running his business – and earning more money! – is to pay close attention at those classes.
What he’s looking for is:
- A target market
- A problem that the target market has that he can solve, and that perhaps no-one else is solving
Once he’s found that problem then he briefly outlines a training program that will teach people how to overcome it.
Here’s an important step though: before he fully creates that training program Tom needs to check that there is serious demand for it. And he does this by ‘pre-selling’ it.
By pre-selling this training program Tom gets people to confirm that their interest is serious by actually signing up for the course by putting their money when their mouth is.
If only one person enrols it’s a sign that perhaps the problem isn’t serious enough for people to be willing to overcome it by taking a class. (I say ‘perhaps’ because it’s also a possibility that the sales message used to pre-sell the training class wasn’t good enough to communicate the benefits of the class to potential students).
Let’s say Tom gets 10 people to sign up, at a special rate of $7.50 for each class. Now if the class is 30 minutes long, then Tom has effectively moved his ‘per hour’ rate from $50 to $150 per hour. (10 x 7.50 for half an hour, x 2 to make it hourly.)
So by creating his own training class – rather than teaching existing clients at the gyms that he works for a flat fee – Tom has increased his earning potential. And if he gets 20 people instead of 10, then his hourly rate for the class goes up to $300 per hour.
Now it’s not going to be possible to replace every one-on-one class (at $50 per hour) with a group coaching session where he gets significantly more than that.
That’s where the third prong of the Three Prong System comes in: Leverage
Scaling Up By Adding Leverage
Leverage is the most important prong of the three prongs. Leverage is where you convert your training into a package that allows Tom’s potential students to learn from Tom when Tom is not in the same room.
For the kind of training Tom delivers this could be a book. Or a DVD. Or an online course with streaming video. And the beauty of leverage is that you create it once…and then sell it multiple times. (Selling it online is something I’ll cover in a future lesson for Tom.)
And if the class is something that is ‘evergreen’ (i.e. always in fashion and not something that will become dated) then Tom can be selling his classes as leverage next month. And the month after. And next year. And the year after that. And so on.
When you get to this stage your business can generate much more income than is possible by relying on consulting alone.
The Easiest Way To Create Leverage (And Offset Production Costs)
Now for Tom’s business his ‘leverage products’ are almost certainly going to require video footage. And that means there are going to be significant production costs – video hire, video editing and the like.
One way to create leverage initially and offset those production costs is to run a training class that pays for those production costs. Let’s go back to the simple examples we’ve been talking about. And let’s say that for each class that Tom wants to turn into a part of a leveraged product it’s going to cost $300 for filming and editing.
In that situation if Tom can get 30 people paying $10 a class….then his production costs are covered. And whilst he’s effectively teaching those classes for ‘free’ – that investment of his time will be rewarded every time he sells one of those recorded classes.
Two More Benefits Of Recording Training Classes
There are two more benefits of recording training classes for leveraged products.
The first benefit is that those people who buy the leveraged version will see other folks just like them taking the class. This makes it much easier to visualize yourself actually doing it. Though when setting up a leveraged product like this you have to make those people aware that they are going to be filmed and deal with the legal issues of that with release forms and the like.
The second benefit is that at the end of the series of classes Tom can get video testimonials from the people who’ve taken the class where they talk about the benefits they’ve received from following Tom’s training, how it makes them feel, and so on.
Again this is important for potential future students – they can see and hear people just like them talking about the class and their results.
Back To Where We Started – Consulting
Here’s a final piece of advice I’d give to Tom, and it goes back to how transitioning to the Three Prong system started. If you remember back at the top of the article, we talked about getting ideas for training courses from Tom’s one-on-one consulting clients.
And asking them if they would be interested in a course that deals with a problem that Tom can solve.
When Tom has identified that problem area, there’s a vital step he should take before going through the course with a group of students and having it filmed is to go through the course with one or two students. And that vital step is to go through the course with one or two private students.
Here’s why it’s so important. Most ‘teachers’ are experts at their chosen subject. Or know a lot about it. On a scale of One to Ten – where one is a novice and ten is world class – let’s call them a Seven. Or an Eight.
And most of the people who they are going to teach are Ones. Or Twos. Maybe a few Threes. Most teachers have forgotten what it’s like to be at the One level, or the Two level, and their teaching tends to be aimed at those a couple of steps below them. So maybe at Level Fours and Level Fives.
Consequently they skip over things that the Level Fours know – or can keep up with – but that the Level Ones can’t. In a class where the instructor is actually there this isn’t fatal. Because people can ask questions. In a leveraged class where the training is on video this is fatal – because you’ll lose people.
So it’s absolutely critical for the future success of the course that Tom goes through it first with a couple of students – and makes notes of where they struggle. And stops them. And asks them why they are struggling. And builds solutions to these areas into his class.
In fact this is how Tom and I met. Because I was trying to go through a series of exercises designed to increase general mobility – and the Instructor of those classes was demonstrating them via video, but those demonstrations were too quick for me to be able to accurately reproduce. And Tom does a lot of Pilates and Yoga instruction at the gym where I swim – and I asked him about them and I started studying them with him, and he would break them down into manageable steps (baby steps) that I could understand and implement on my own.
The other way to solve this problem is to have some way that students who’ve brought the leveraged version of the course can ask questions. And teachers should never think of questions as a nuisance – because approached properly questions are gold dust. (I’ll talk about that in another post soon.)
I’ll come back to The Three Prong System in my next post too.
Consulting as defined in the Three Prong System is where you trade your time for money.
A lot of people are stuck in the consulting trap – this is where all their income is based on hourly activities. And the only way to increase your earnings when you do 100% consulting is to either put in more hours. Or increase your hourly rates.
Even if you do this, your earnings nosedive if you are sick. Or go away for a few weeks. Or stop working for any reason.
A way to escape the consulting trap is to incorporate your consulting into the Three Prong System.
The Three Prong System is made up of Consulting, Training and Leverage. Consulting is getting paid to teach one on one. Training is getting paid to teach one on many (say 10, or 20 or 30). And leverage is products where you are physically present to do any teaching.
To start building your three prong system, you can use your consulting to identify problems that you can solve with a training class. Then you put together that training class and go from teaching one to one, to teaching one to many. And you leverage that training class by creating a self-study product and being able to sell it to people beyond your local area.
We’ll talk more about this in the next post.
If you have any questions, feel free to post them below.